Broker, investment considerations

Carefully selecting an experienced,
licensed and ethical real estate broker will go a long way in helping you achieve your investment goals. When educating investors, Ron Sparks, MAI, MBA,
and Jeff Tolrud, CCIM, managing directors/partners in investment sales for
Colliers Arnold, cannot overemphasize
these points.

“There really is no substitute for experience,” says Sparks. “Issues will arise during
a transaction and a professional broker
will have the background and skills necessary to handle them.”

The ability to communicate effectively
and uncover your investment objectives
and goals are also important factors, adds
Tolrud. “The broker’s goal should be to
become the client’s trusted adviser.”

Smart Business recently asked Sparks
and Tolrud for more details about the intricacies of the investor/broker relationship.

What are some of the most important qualities to look for in a commercial real estate

Sparks: Experience, integrity and professionalism should top the list. A good
broker should understand the real estate
asset and the marketplace and possess the
technical skills to successfully create and
execute a marketing plan. Today, the best
professionals work in teams. Brokerage
teams allow for an improved service offering. Having a quality service delivery platform is also a must.

Tolrud: The broker should understand
the needs and risk thresholds of the client,
as well as the client’s short- and long-term
business objectives. Relationships with
other groups such as county/city building
departments, architects and attorneys are
also important due to the complexities of
the many processes involved with commercial real estate transactions.

Why are these qualities so important?

Sparks: Experience is needed to insure
that a broker has been through the sales
process before. Integrity is an absolute
must. A good broker must be able to represent the best interests of his client. The
firm should be able to offer a customized
marketing approach to meet the needs of
each client.

Tolrud: Working with a firm that offers
the proper support, research, databases,
professional affiliations such as the CCIM
network, and — if required — property
management services, offers obvious benefits in terms of expertise and efficiencies.
In all dealings, the importance of honesty
and ethics cannot be overemphasized. In
short, someone you can trust.

What are the most important factors to
review when considering a real estate investment?

Sparks: One of the more important, and
often overlooked, factors is the level of
management or time the property may
require of the owner. Some investors just
want cash flow and do not want to deal
with a variety of tenants, lease turnover or
varying occupancy levels. Passive investments, such as single-tenant net leased
properties, may be a better fit for this type
of owner. Other investors may be willing to
accept more risk and may want to consider properties that are well positioned for
redevelopment, renovations or conversion
to another use.

Tolrud: Investors should consider their
objectives. Are they looking for a relatively
quick investment or a longer-term investment? What level of management intensity
are they willing to take? An exit strategy
should be in place as well — both for tax
purposes and for determining what the
investor will do with the profits. A good
broker will help the client determine these
factors based on the type of property. Does
it need to be renovated to add value? Does
it need better management to enhance
retention? Are there vacancy, maintenance
or marketing problems? Is the property
being purchased for another use, like redevelopment? You have to evaluate expenses
as well as income in order to maximize
investment return.

What types of investments are hot right now?

Sparks: Large and small investment
properties of all types continue to be in
strong demand. We continue to see significant demand for office, retail and industrial properties.

Tolrud: Ron and I primarily focus on
non-institutional, private-equity investments that continue to see significant

How can investors get the most out of their
relationship with the broker?

Sparks: Clients will benefit most by
being honest with their broker (trusted
adviser) about their situation, goals and
expectations. Once these factors are
understood, it is the broker’s job to educate
clients on how to best meet their goals.

Tolrud: We strongly believe in setting
reasonable and attainable goals in advance
of beginning an assignment. We will not
over-represent a property to an owner simply to get a listing assignment. We work for
clients who we feel we can help the most.
In our case, we can provide a tremendous
value-add proposition with our firm’s capabilities, history and reputation to an individual’s real estate investment.

managing directors/partners in investment sales for Colliers
Arnold. Reach them at (813) 221-2290.